Total foreign direct investment into Singapore, Malaysia,
Indonesia, the Philippines and Thailand rose 7 percent to $128.4
billion last year, from $120 billion in 2012, economist Chua Hak
Bin said in a report today. Investment into China fell 2.9
percent to $117.6 billion in the same period, declining for a
second year, he said.

A drop in China’s working-age population is robbing
President Xi Jinping of an engine of three decades of growth,
even as it helps the government restructure the economy away
from investment and manufacturing-led expansion. The situation
is reversed in Southeast Asia’s developing nations as rising
numbers of youth search for employment, luring companies seeking
a cheap labor force and new domestic markets.

“Rising foreign direct investment into Asean will likely
remain a favorable structural trend over the next few years,
given favorable demographics, competitive wages and geopolitical
competition between the superpowers which remain the major
investors,” Singapore-based Chua said.

Japan Prime Minister Shinzo Abe last week stepped up a war
of words with China, alleging an international campaign to taint
Japan’s image by focusing on past militarism rather than decades
of peace since World War II. China today retained a target for
7.5 percent economic growth in 2014, signaling limits on the
leadership’s efforts to curb pollution and credit expansion in
the world’s second-largest economy.

China’s ability to attract investment may be hampered by
higher manufacturing wages and an appreciating currency, Chua
said. Indonesia has overtaken China and India as the most
promising country for Japanese companies for business
development, according to a Japan Bank for International
Cooperation survey.